Compagnie Financière Richemont SA is a Switzerland-based luxury goods holding company. Their portfolio includes several of the world's leading luxury brands, with particular strengths in jewellery, luxury watches, and writing instruments. CFR takes a long-term view in developing its products and businesses, helping them to thrive in new and existing markets in a responsible, sustainable manner. Brands include Cartier, Alfred Dunhill, Montblanc and Van Cleef & Arpels.
Technically, a price that appears to be in the Improving quadrant of the Relative Rotation Graphs (RRG) analysis makes for an attractive investment opportunity (see the insert on the main chart).
The RRG is used to evaluate the relative strength of different shares against a benchmark and is divided into four quadrants: Leading, Weakening, Lagging, and Improving. When a share moves into the Improving quadrant, it implies that it is picking up momentum relative to the benchmark, thus signalling that the upward trajectory is likely to continue - a bullish indicator.
According to the RSI (Relative Strength Index), the stock will be overbought at ~R4 960. This classifies our profit target of R3 023 as realistic.
We suggest a medium capital at-risk allocation to this trade.
Share Information
| Share code | CFR |
|---|---|
| Industry | Luxury Goods |
| Market Capital (ZAR) | 1464.15 billion |
| One year total return | 42.57% |
| Return year-to-date | 14.18% |
| Current price(ZAR) | 2 548.00 |
| 52 weeek high (ZAR) | 3 479.87 |
| 52 week low (ZAR) | 1 685.20 |
| Financial year end | March |
| Closing paragraph | Several technical indicators point to further upside potential. The stock remains below its 200-day simple moving average of ~R2 784. |
Consensus Expectations (Bloomberg)
| FY23 | FY24E | FY25E | FY26E | |
|---|---|---|---|---|
| Headline Earnings per Share (EUR) | 6.91 | 7.38 | 8.04 | 8.76 |
| Growth (%) | 6.80 | 8.95 | 8.98 | |
| Dividend Per Share (EUR) | 2.25 | 3.26 | 3.58 | 4.10 |
| Growth (%) | 44.89 | 10.01 | 14.54 | |
| Forward PE (times) | 17.02 | 15.62 | 14.33 | |
| Forward Dividend Yield (%) | 2.59 | 2.85 | 3.27 | |
| Closing paragraph | Earnings growth expectations remain decent over the forecast horizon, underpinned by solid fundamentals, which should be supportive of the group's long-term growth trajectory. | |||
Buy/Sell Rationale
Technical Analysis:
Long-term fundamental view:
| Share Name and position |
QLT - Profit take (Close the Position) |
VOD - Stop-loss (Close the Position) |
STXRES - BUY (Continue to hold) |
|---|---|---|---|
| Entry | 18.95 | 114.34 | 59.63 |
| Current | 21.30 | 113.27 | 62.70 |
| Movement | 12.4% | -0.9% | 5.1% |
| Summary text | We suggest taking profit early on this position. | The stock recently triggered our stop-loss, leading us to close the position. |
The ETF is trading at some major support or accumulation phase and is of interest. Remains below the 200-day simple moving average. Fading downside momentum is supportive.
Our profit target is R69, with a trailing stop-loss at R59. Exit the trade around 8 January 2024. |
| Share Name and position |
BTI - BUY (Continue to hold) |
ANH - BUY (Continue to hold) |
INL - BUY (Continue to hold) |
|---|---|---|---|
| Entry | 618.49 | 1061.16 | 105.00 |
| Current | 640.00 | 1086.93 | 110.36 |
| Movement | 3.5% | 2.4% | 2% |
| Summary text |
A price action that appears to be in phase 2 of a two-phased bullish trend period remains of interest. Crossed above its 200-day simple moving average. Upside price momentum supports the trade idea.
Our profit target is R678, with a trailing stop-loss at R616. Exit the trade around 11 December 2023. |
The price action seems to be forming a base and this remains of interest. The share continues to test the 200-day simple moving average. Fading downside momentum is supportive of the trade.
Our profit target is R1 174, with a trailing stop-loss at R1 039. Exit the trade around 13 November 2023. |
Based on the RRG analysis, the share remains attractive (particularly due to its ability to stay above the 200-day simple moving average). Upside momentum remains supportive of the trade.
Our profit target is R121, with a trailing stop-loss at R101. Exit the trade around 30 October 2023. |
